Can Monster Beverage Deliver Strong Sales Growth in 2Q17?



Sales growth

Monster Beverage’s (MNST) international growth, innovation, and strong portfolio have driven its sales in recent quarters. In 1Q17, the company’s net sales were $742.1 million, reflecting a 9.1% year-over-year increase. Analysts expect the company’s 2Q17 sales to rise by about 9.4% to $905.1 million.

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More on 1Q17 sales

In 1Q17, Monster Beverage’s sales were mainly driven by continued consumer demand in both domestic and international markets. However, production shortages for Java Monster and Muscle Monster dragged down the company’s 1Q17 sales by ~$12 million. Also, adverse currency fluctuations impacted the company’s 1Q17 net sales by ~$3.7 million.

The company delivered strong performance in its key international markets in 1Q17. The company’s international sales grew 28.0% on a year-over-year basis to $190.9 million in 1Q17.

Second quarter expectations

Monster Beverage has been delivering stronger sales growth than its nonalcoholic beverage peers Coca-Cola (KO), Dr Pepper Snapple (DPS), and PepsiCo (PEP), primarily because energy drinks are enjoying higher demand compared to conventional carbonated soft drinks. PepsiCo’s top line grew 2.0% to $15.7 billion in fiscal 2Q17. Coca-Cola’s revenue fell 15.9% to $9.7 billion in 2Q17 due to the impact of refranchising its bottling operations and currency headwinds.

The analysts’ expectation of 9.4% sales growth in Monster Beverage’s 2Q17 sales is supported by the strong demand for the company’s Monster Energy brand drinks. Also, the addition of Coca-Cola’s energy drink brands to the company’s portfolio has been boosting its sales.

However, production shortages of Java Monster and Muscle Monster are expected to negatively impact the company’s top line in 2Q17. The company has been trying to address production capacity shortages by manufacturing certain flavors of its Java Monster brand in Europe and delivering them to customers in the US.

We’ll discuss expectations from Monster Beverage’s 2Q17 earnings in the next part of this series.


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